No, It’s Not the Putin Price Hike, No Matter What Joe Biden Claims

Last year, Joe Biden and his administration claimed that inflation was “transitory”

Politicians like their buzzwords and speaking points, and the Joe Biden White House and the Democratic Party use them as much or even more than when Donald Trump and the Republicans ran Washington’s freak show.

Last year, the mantra from the Biden administration was that inflation was “ transitory, ” meaning that the pumpiing would not last long. From Biden (when he could remember what his talking points were supposed to be) to John Krugman in the  New York Times , the particular faithful repeated the newest term of life: “ Transitory. ”

Because the hard reality has placed in that this inflation will not be going away any time soon, we have new talking points and buzzwords in the house of Biden and his political allies, the renaming of inflation itself. No more do the faithful dutifully replicate “ transitory” when mentioned skyrocketing consumer and maker prices; today the holy writ is “ Putin’s price hike . ”

Americans can be assured that pumpiing is the result of an unholy alliance between Vladimir  Putin and American energy businesses, claim  the Biden management and its supporters. How do we all know this? We have it from your highest authorities of truth, Sen. Elizabeth Warren and Jerome Powell, chairman from the Federal Reserve.

In a recent  op-ed   for the   New York Times , Warren informs her readers that all that is needed to manage inflation is some tough talk from Biden and also a new regime of cost controls. She writes:

We can furthermore act quickly to rein within costs for middle-class households. In the very short term, that means stopping companies from jacking up prices to boost their profits. Price increases are powered by many factors, including pandemic disruptions to global supply chains and Vladimir Putin’s war in Ukraine. Nevertheless the Kroger chief executive, Rodney McMullen, said “ a little bit of inflation is always good in our business, ” it is no surprise that, by a margin of two-to-one, American voters shouldn’t buy the explanation that companies are just passing along expenses. Instead, they blame companies for raising prices to improve their own profits. Even Given Chair Jerome Powell, a conservative Republican, acknowledged that giant corporations raise prices simply “ because they may. ”

Elsewhere, Warren claims the fact that answer for lower costs lies in enforcement of antitrust laws, echoing Joe Biden’s recent claim that our economy suddenly has become a nest associated with price-gouging monopolies. Warren procedes say:

Congress should pass laws to reinvigorate competition and three quarters (of American voters) strongly believe that oil and gas companies should not make gobs of money off this power crisis. Beefing up regulators’ authority to end price-gouging, splitting up monopolies, and passing the windfall profits tax is a great start.

To read Warren, one would need to believe that the Federal Reserve’s policies of pumping trillions of dollars directly into the hands of consumers to counteract the covid lockdowns and restrictions really had absolutely nothing to do with what we are seeing now. Instead, we are likely to believe that suddenly (and designed for absolutely no reason whatsoever) greedy capitalists started to raise prices because they wanted higher earnings.   Even though they had not raised prices when Trump was president (even although Trump  himself  was a carried away capitalist who would not think twice to raise prices), they made a decision to pounce when a hostile program took over the federal government.

Interestingly, neither Biden neither Warren is willing to put the blame on Powell and even the Trump administration despite the fact that both men have played a huge role in the inflationary chaos we currently are experiencing. They have chosen, instead, to blame private enterprise and call for the kinds of price control regimes that however, Jimmy Carter regime declined to implement even though the public inflation numbers under Billings were higher than they are these days. In the three  graphs below, it is not hard to observe the culprit: a huge spike in the cash supply, all underwritten from the Fed, which went on a good asset-buying spree to financial the unholy mess.

The second and third graphs show the growth of the Fed balance page, and one can see that, such as the spike in money growth, the balance sheet exploded throughout the covid lockdowns and is still metastasizing to the point where Fed asset purchases are consisting of about 40 percent of US  gross domestic item.   Jeff Deist explains   what happened:

Initial, consider the two covid stimulation bills passed by Our elected representatives in 2020 and 2021. These pumped more than $5 trillion directly into the economy in the form of payments to government, payments to households, joblessness benefits, employer payroll loans, cash subsides to airlines and countless other industries, and a host of grab-bag earmarks which had nothing to do with covid. This brand new money injected itself directly into the veins of the everyday economy.

2nd, supply chains remain degraded because politicians around the world failed to think through their lockdown plans. The deeply interconnected worldwide economy does not have an ON/OFF  switch. Idle resources and idle workers don’t simply springtime to life and produce goods and services on command. But our policy makers have no conception of the structure of production, the temporal elements, or the ravages of malinvestment created by their own political decision to shutter businesses.

3rd, covid allowed the Fed to justify yet another spasm of “ extraordinary” monetary policies beginning in March 2020. This gave central lenders an easy out, in a sense, because real trouble was already coming back in September 2019. The particular repo market, which commercial banks use for immediate (overnight) financing of their operations, suddenly seized up and sent rates spiking. These types of paroxysms embarrassingly forced the Fed to inject billions of dollars into its “ standing” (i. e., permanent) repurchase facility  and to think about yet another round of QE (asset buying) even after it had promised to reduce its balance sheet, still bloated with the detritus from the 2007 crisis.  

When 1 understands the extent from the economic intervention of both the Fed and governments whatsoever levels in the past two years, the real question one should ask is not really why we are having inflation, but rather why prices have never risen further.   Furthermore, ever since September 2008 (as is clear from the second and third graphs), the Fed has gone on an unsustainable purchasing binge that has propped in the mortgage markets, repos, plus long-term government bonds (Operation Twist).

A single must emphasize that the economy simply cannot absorb the bucks that the Fed has purged into it. Furthermore, despite the actual so-called ruling classes are telling us, stuffing dollars to the hands of people who lost their jobs due to wrong-headed covid lockdowns and production restrictions and paying other people not to work are  not   a perfect substitute for producing real services and goods.

Even if Putin were to call off the Ukraine invasion and agree to market Russia’s oil and natural gas at steep discounts, the current consumer price increases in the united states would remain near unrevised. While no doubt the attack has affected current gas and oil prices (and European natural gas prices), it is often irrelevant in the overall pumpiing picture in this country.

Biden and the ruling classes never will acknowledge to such a state of affairs, and can be sure that Krugman, the  New York Times , the  Washington Article , and other mainstream journalism outfits will blame  Putin, climate change, corporate profits, and whatever else crosses their particular paths. Meanwhile, the Given will continue its unsustainable practices and everyone else will watch inflation erode their personal assets.

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